Etihad Etisalat (Mobily) beat fourth-quarter earnings forecasts as growth in subscribers boosted profit of Saudi Arabia's second mobile phone firm by 55.8 percent.

Mobily made 514 million riyals ($137.1 million) in the three months ended Dec. 31 compared with 330 million riyals a year earlier, it said in a statement on the Saudi bourse Web site.

The quarterly profit topped all six forecasts for Mobily's earnings in a Reuters net profit survey last month, which ranged from 349 million riyals to 481 million riyals. The average forecast was for a profit gain of 23.8 percent.

"The improvement in earnings was due to an increase in sales outlets, improved services which have both led to a rise in the number of subscribers," Mobily said in the statement. It did not release subscriber numbers.

The company, in which Emirates Telecommunications Corp (Etisalat) owns 35 percent, said 2007 profit almost doubled to 1.38 billion riyals, from 700 million riyals in 2006, as sales grew 44.3 percent to 8.44 billion riyals.

Mobily's net margins improved by almost 40 percent, it said. Earnings per share rose to 2.76 riyals at the end of 2007 from 1.4 riyals in 2006.

Mobily competes with incumbent Saudi Telecom Co., the largest Arab telecom firm by market value, for mobile phone users in the largest Arab economy, home to about 25 million people.

Mobily was able to capture 30 percent of Saudi Arabia's mobile phone market within 18 months of starting operations in 2005.

Kuwait's Mobile Telecommunications Co (Zain) is leading a consortium that expects to start operating Saudi Arabia's third mobile phone network later this year after paying $6.11 billion for the licence last year.

The three mobile phone operators may be generating 55 billion riyals in revenue in 2010 in the world's top oil exporter, 38 percent more than 2006, the kingdom's telecom ministry Mohammed bin Jamil al-Mullah said in May.

Shares of Mobily have fallen 5.6 percent in the last five trading days, closing at 67 riyals on Saturday. Global Investment House set a price target of 76.8 riyals on the stock in October, while National Bank of Kuwait's price target is 76 riyals. - Reuters